Business and Business Environment Report: Sainsbury's Case Study

This report provides a comprehensive analysis of Sainsbury's business environment, exploring different types of organizations, their purposes, and legal structures. It delves into the size and scope of various businesses, focusing on Sainsbury's as a case study within the UK grocery market. The report examines the interrelationships between organizational functions like marketing, finance, and HR, and their impact on Sainsbury's organizational objectives and structure. A PESTEL analysis is conducted to evaluate the macro environment, identifying both positive and negative influences on the company. Furthermore, the report utilizes a SWOT analysis to assess Sainsbury's internal strengths and weaknesses, followed by an examination of how these internal factors relate to the external macro environment. The report concludes with a summary of the key findings and recommendations for Sainsbury's strategic development.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
P 1 Different types and purpose of organization and their legal structure- ...........................3
P 2 Size and scope of several types of businesses -...............................................................5
P3 Relationship among organizational functions and organizational objectives and structure -5
P4 Evaluation of macro environment among the organization which can have negative and
positive impact-......................................................................................................................6
P5 Conduction of internal analysis with the help of SWOT to identify strengths and weakness
of organization -.....................................................................................................................9
P6 Interrelation of strengths and weaknesses with external macro factors -........................10
CONCLUSION..............................................................................................................................10
REFRENCES.................................................................................................................................11

INTRODUCTION
Business and Business environment consists of the all external and internal factors that
can be customer expectations and needs, employees, supply and demands, clients, supplier etc.,
This all factors affects the company's ability for building and maintaining successful relationship
with customers.
Sainsbury is the largest chain of supermarkets which operates its business in United
Kingdom. The company was founded by John James in 1869. The above report includes the
different types and purpose of organization and their legal structure. Describing the size and
scope of various type of business. The report carried forward with evaluating the relationship
among organization function and organizational objective and structure. Identification of macro
environment of the company with the help of PESTEL Analysis. The report ends with the SWOT
analysis of the organization and interrelation of strength and weaknesses.
P 1 Different types and purpose of organization and their legal structure-
There are various types of companies and each of the company have their particular
function, purpose, structure. Organization can be classified into three different parts that are
described below-
Public Organization-
Public companies are governed and owned by government in the United Kingdom.
ANCB liability for their managers and owner is consists by this organization. The government
have 51% of share in the public organization and rest of share are hold by other shareholders.
The public organization example are National bank which is Royal Bank of Scotland Group
(RBS), schools, hospitals etc.
Vision and Mission
Main purpose of this organization is to provide services which consist of governmental
and product & services such as public, military, education, police, financial services and health
care services to the public. The organization is responsible to central and local government
(Boone and et.al., 2019). Vision of Royal Bank of Scotland Group is to provide effective
services to students with the main aim to transform them to become genuine management
professionals. Mission is to become the first choice for consumers and businesses. So, it can be

said that from vision and mission that the main aim of public organization is to serve people
rather making money.
Legal structure
These organizations or bank are funded by the government so there main responsibility is
to provide services ad products to public rather than gaining profit from producing products and
services. Tax is being paid by government that is local and central government through Council
Tax. These organization renders dividend to their shareholders on time it's their prior
responsibility.
Private Organization-
These type of companies work under the private hand or individual owner. This
organization are controlled, owned and managed by two or more than two directors. This
organization are strictly regularized by the government policies, rules and regulation which are
mandate by the government of United Kingdom. The private organization doesn't have shares of
government in their company. In private organization partners gains the limited liability. These
organization gain profit by going through the needs and demands of the consumer within the
market. Example of private organization is Sainsbury's.
Vision and mission
The main aim of this organization is efficient use of resources and optimal use of
resources. The organization which can fall under these are TESCO, Sainsbury etc. In the context
of Sainsbury's it is stated that its vision is to become the most trusted retailer. The mission is
become the consumer's first choice for food and attract wider range of customers. So, from the
vision and mission it can be said that the ultimate aim is to earn profit as it is a private
organization.
Legal structure
Legal structure of this organization is consists of joint stock company that have separate
legal entity in it. Each shareholder of the company are the part of the company. The shares of this
organization can not be sold to the public. Each share holder of the company are entitled to place
1 vote in the Annual General Meeting of the company (Antikainen and Valkokari, 2016).
The organization's profit is being distributed among the shareholder in the form of
dividend at every financial year-end. There are many documents which are mandatory to be used
by the organization before establishing the private company that are Memorandum of

Association (MOA) and Article of Association (AOA) this includes the overall comply detail in
it along with the objective, aim, values and mission of the organization, registered office and
headquarter, capital by the owners and capital which is being paid by the shareholder etc., are
being mentioned in this documentation.
Voluntary Organization-
This organization is those who work as the Not for profit organization. The main purpose
of these type of organizations is to work for society's welfare. This organization are funded by
the donation form public and government, and they are totally depended on that. The
organization can be of two types that is Voluntary agencies and Voluntary association (Boyd and
et.al., 2017). The biggest example for this organization in UK is NHS.
Vision and mission
The main aim and vision of NHS is to show respect and dignity and give qualitative care
and services to vulnerable people and all those who are in need. Mission of these type of
organizations or NHS is to prevent people from diseases and decreases all these problems.
Legal structure
Legal structure of the organization consist of partnership which is done with NGOs,
social care, government firms and work for society's welfare. Partnership deed is signed by the
both of the business partner so that both of the partner are accountable to that.
In addition, it can be said that all these type of organizations may be small, medium and
large which are being considered with number of employees and turnover. And in the context of
legal structure, there are different types such as:
Sole proprietorship: It is a legal set up which is controlled and owned by a single
person. In this type, business owner is not separate from the business and hence, has liability of
all profits and losses as a single person.
Partnership: Partnership are business enterprises which is being owned by 2 or more
than 2 people. Relationship between parties is governed by a deed of partnership in which all
informations is being written like investment amount by both parties. On the basis of investment
amount both parties share profits and losses.
P 2 Size and scope of several types of businesses -
 Public Sector Organization– Royal Bank of Scotland Group employees over 67,000
employees. It the largest bank in the world which provided its services globally along

with this bank has its £1.9 trillion as assets and £1.8 trillion of liabilities with them. The
bank conducts its operation with variety of the brand of banking which render the
personal banking and business, corporate finance and private banking & insurance.
 Private sector Organization- Sainsbury had its headquarter in the London, United
Kingdom. It employs more than 186,900 employees per year. The net income of the
company is £309 million and the operating income is £518 million in 2018. The company
has more than 1415 shops globally. Company is divided into the three major divisions
that is Sainsbury's Supermarket Ltd, Sainsbury's Agro and Sainsbury's Bank. The largest
shareholder of the company is sovereign wealth fund of the Qatar (Teece, 2018). The
company is listed with the London Stock Exchange. Company can expand its business in
more markets so that they can raise their profit margins in the coming years.
 Voluntary Sector Organization– The NHS (National Health Services) is the largest
social care organization which employ more than 10,00000 nurses in their staff. More
than 5 lakh health care professionals and doctors are working with the NHS. They had
19,772 ambulances with them. Scope of NHS that they can improve their service and
render the quality services to their patients. And they are trying to accomplish their
objective.
P3 Relationship among organizational functions and organizational objectives and
structure -
In the context of organizational functions of Sainsbury's, it can be said that it has
marketing, finance, sales, production and other departments that communicate and collaborate
with each other. This collaboration and working with each other is the main key and strength of
its organizational culture which shows that all department have a strong interrelation.
The major organizational functions and their interrelationship with other departments are-
Marketing and sales-
Marketing is the basic function of Sainsbury where it involves promotions and
advertising of products and services. This function mainly aims at selling products and services
at the wide platform and establishing an extreme opposition in the market so that consumer are
easily attracted towards the company (Sharma and Singhal, 2016). For that it gets several
informations about customers as what they requires and which trends are popular in the market.
On the other hand, sales department is responsible for providing products to customer as per

their needs or sale products of the company as well as increase this sales rate. For increasing
sales, it is important for sales department to have knowledge about needs of customers by which
it can satisfy and attract them. For this purpose, sales department communicate and contact with
marketing department and take all informations about the market and work accordingly. It is
very helpful for company in achieving their objectives and goals effectively and attracting
consumers (Bendell, 2017).
Financial and HR
Finance department of Sainsbury is mainly responsible for maintaining the appropriate
cash flow with the organization and monitoring the different budgeting activities. These function
of organization majorly focuses on allocating resources for various activities that can be
launching new product, advertising, promotions, recruiting people, training to them and
marketing etc. On the other hand, HR is employees centered as it performs all activities which
are beneficial for employees as well as the company such as recruitment ad hiring people,
training to them, providing rewards for motivation and retention etc. For performing all these
activities, it requires money for which it has to communicate and tell financing department and
manager about all activities for getting enough money. So, it shows that there is strong
interrelationship between functional departments. It is helpful for the company in raising their
profit margin with the help of effective financial management so that the company's goals and
objective can be easily accomplished (Pearson, 2017).
Organizational structure of Sainsbury's: Organizational structure shows the way of
performing functions as well as communication among functional departments. It is stated that
Sainsbury's follow hierarchical organizational structure in which chain of command between
superior level of the organization (Saiti and Stefou, 2018). The main feature of this structure is
all departments can communicate with each others in an efficient manner. So, it can be said that
interrelationship of all department impacts on organizational culture of Sainsbury's and give
opportunity to the company to accomplish its goals.
P4 Evaluation of macro environment among the organization which can have negative and
positive impact-
The grocery industry of United Kingdom is formed of micro and macro both
environment. Whereas macro environment is the upper layer of business which contains the
environmental factor which affects the supermarkets in the United Kingdom (Storey, 2016). And

micro level factor affects the company Sainsbury with its rivals. So for evaluating such factors
company is needed to go through the PESTEL Analysis of the company which has been
described below-
Political Factor -
The Sainsbury conducts its business across many countries including the Asia and
Europe. It can be affects by many major political factor that can affect operation of the company
directly. These factors include the tax rate, economic condition, political instability,
unemployment rate and implementation and inundation in the legislation of the country where
new business is being conducted. The import duty on product and services also affects the
organizations as company have brought it's some raw material and essential form other countries
also outside UK. Brexit in the United Kingdom has put a negative impact on all the businesses in
United Kingdom thus its affects the Sainsbury also as the prices of the food are adversely
affected the purchasing power of customers have been declined suddenly as the value of pound
has been down. The restriction in the UK on FDI also affects the companies in operating their
business activities.
Economic Factors-
The major economic factor which affects the supermarket in the UK majorly is cost of
labour. The Minimum Wage rate in United Kingdom is 4.4% in 2018 for the employees of 25
age or more than that. This had an upward shift in the company by millions of the pounds. There
is an economic inflation in the market because of Brexit which had a bad impact on the all
business which access in the UK (Akhmetshin and et.al., 2018). The consumers buying power
has been declined very rapidly. So the Sainsbury sales has been directly affected and thus it has
been declined significantly. Because of Brexit it has created an economic crisis in the whole
United Kingdom which had affected the businesses very much. Up and down in global exchange
rate also affects the company in many ways. Pension and high wages must be given by the
company to their employees.
Social Factors-
The trend of shopping changes time to time among the customers according to the current
trends in marketplace. Now in the technological generation and the humans are more busy in
their life they want all things very fast that is fast delivery of product and services on same day,
paying that on one click and easy to return flexible policy. So with the trend Sainsbury must

address thus and provide their customers services and products which is helpful in fulfilling the
needs and demands of the consumers (Raziq and Maulabakhsh, 2015). The other main issue
which is being faced by the organization is that now people are more aware about their health
and moving towards the health and nutritional diet. So company must render the products and
service which provides this factors. The organ ix food and beverages are being adopted by the
adult consumers along with non-alcoholic drink and sugar less products. It has created major
threat for the company as the company has stocked up the processed drinks and foods in their
stores already and thus they can't maintain the stock of the organic food now. This decreases the
sales of the company.
Technological Factors-
Company should move toward the technological advancement and should adopt the new
technologies so that they can create new opportunities for the company which is helpful for
attracting the large amount of consumer to the stores. So the company has developed the digital
services that are online food shopping app so that consumer can purchase their food easily form
that app. They have also developed the click-and-collect services in which the order is placed by
customers and then collected by them form their nearby local supermarket (Dyllick and Muff,
2016). This is helpful for company in raising their sale by 80% and orders have also been
increased by 20% during the financial year. The company thus can easily gain the huge amount
of customers attraction towards the company. Thus, the company's profit margin and revenue has
also been raised.
Environmental Factors-
Government nowadays mandate the companies to follow the sustainable environmental
practices for their company which can be further helpful for the country. And thus companies are
liable to emphasis on these factors and adopt these practices into their business practices. So
consumers also demanded for zero waste supermarkets as the food waste is rapidly raising and
has become one of the greatest challenge in the environment which is being faced by the food
industry. So the company is using the paper packaging for that and the recycled material is being
used by the company in their product packaging.
Legal Factors-
The new “sugar tax” is levied by United Kingdom government by aiming is to decline the
sugar content in drinks till 2020 by 20% this it impacted the product of the Sainsbury as they had

already stocked the sugar contained products. The advertisements of the products which contains
the high-fat, salt and sugar (HFSS) food and drink products for the child whose age is below 16
years. It affects the marketing and promotional activities of the company, and they can not
advertise and promote their products easily (Charter, 2017). The business practices have been
conducted according to the Food Retailing Commission (FRS) which had strict code for
commencing business practices across UK.
P5 Conduction of internal analysis with the help of SWOT to identify strengths and
weakness of organization -
The SWOT analysis of Sainsbury's main aim is to analysis the strength and weaknesses of
company with that exploring the opportunities and threats for the company which are being
described below-
Strength-
The major strength of the company is that is had originated 18% of sales form the online
sales with the help of Agros delivery services which is helpful for company to compete with the
rivals. The strategic distribution channel of the company is other strength of company as it
renders the flexibility to its customers (Evans and et.al.,2017). Company has diversified business
with the strong market share. The company aims at providing differentiated proposition of food
along with great quality.
 It has taken right moves in expanding its business.
 It has innovative promotional strategies which helps it out in attracting wider range of
customers.
Weaknesses-
The company's major weakness is that the company operates its business at very low
margin so company doesn't have much profit from that. Sainsbury has a single operating market
which lacks company from competing with its rivals from market. The losses of the Agro
company is the weaknesses of company as company has acquired that for raising their profits but
it can rather consume the profits of the Sainsbury and cause the losses to company.
 Low profit margins which is decreasing profit of the company as it may prove as a
strength but now it is a weakness of this company.
 With the help of SWOT model analysis, it is also analysed that growing cost by investing
in technologies in promotional strategies is other weakness.

Opportunities-
The company can have an opportunity to expand its business through the online
collaboration so that they can attract wide range of consumers. For that company can open the
online groceries and convenience stores channels for the future growth of the company (Saleem,
2017). They can also input the technology analytics in their technical system so that they can
help their customer insights and satisfy their customers with the awesome services.
 SWOT analysis model does not only help the company in analysing its strengths but also
allow it to analyse opportunity. The main opportunity of Sainsbury's is to cater to all
types of customers.
 Expansion into growing economies.
Threats-
The major threat for the Sainsbury is adverse impact of the Brexit on the whole food
industry. The pricing of the food has been raised thus the purchasing power f the consumer will
also decrease due to the fall down in the pound this somehow directly affects the profit and
growth of the company. Company is also facing the intense competition in the market with
various groceries and retail segment they are also the major threat for company.
 Increasing globalization is one of the main threat for this company.
 Increasing competition in food and retail industry is other threat for the company.
So, from the above it can be said that swot analysis is an important tool as like PESTLE analysis
model that helps out an organization in analysing all internal factors that can have impacts on its
performance in critic manner.
P6 Interrelation of strengths and weaknesses with external macro factors -
Business environment is made up of internal and external environmental factors which
have interrelationship as well. It can be said that strengths and weaknesses of an organization
have some link with external environmental factors whose control lance is in the hand of them.
For example: the strength of Sainsbury's which is an internal factor, is it has strong financial
stability and has ability to take right moves in business expansion. Whereas, as per the
technology factor which is an external factor it is stated that advanced technology is increasing
the competition which can be the threat for this company. But with the help of strength and using

financial stability it can invest heavily in technology for improving quality of products which can
help it out to become the market leader and decrease negative impacts on technological factors.
On the other hand, weakness of this company is rising prices in raw materials and food
prices is decreasing profit and it has low profit margin as well. It can impact on the social factor
because as per the social factor, people are becoming more aware about their health, and they
want organic and healthy food but due to high prices in raw material and low profit margin, it
can not produce new and organic food. It can not satisfy needs of different people so, it can be
said that there is an interrelationship between external factors and social factors.
So, it can be said that strength and weakness of the company are interrelated in many
ways which can hinder the improvements in the weakness and make it a strength for company
(Ibrahim and Primiana, 2015).
CONCLUSION
From the above study it is concluded that the business environment plays a major role in
the growth and development of the company. With the help of business environment analysis
company ca easily get through with the potential factors that can boost up the company's growth
and also company can come with the lacking factors so that they can be improved further. This
all is helpful for company in gaining the attraction of the customer to the company and gaining
the huge profit margin for the company. They can also compete with their rivals effectively.